U.S. Ethereum ETFs Debut with Impressive $106.6M Inflow Despite Market Volatility

• BlackRock’s iShares ETF leads with $266.5M inflow; Grayscale’s ETHE faces $484.9M outflows due to easier share selling.
• Despite a $106.6M net inflow to Ethereum ETFs, Grayscale’s Ethereum Trust saw $484.9M outflows, mirroring past Bitcoin ETF trends.
• The options market shows caution with Ethereum, with increased volatility and a risk reversal dip, hinting at possible price drops.

On their first trading day, U.S. Ether exchange-traded funds (ETFs) experienced a net inflow of $106.6 million, despite notable withdrawals from Grayscale’s recently converted Ethereum Trust. With $266.5 million, Bitwise’s Ethereum ETF (ETHW) came in second with $204 million, behind BlackRock’s iShares ETF (ETHA). Fidelity’s Ethereum Fund (FETH) secured third place with $71.3 million.

Strong inflows and outflows for New Ethereum ETFs 

Despite these inflows, Grayscale’s Ethereum Trust (ETHE) experienced substantial outflows, losing $484.9 million, about 5% of its previous $9 billion valuation. The conversion to a spot ETF allows easier share selling, which may explain these high outflows. This mirrors January’s spot Bitcoin ETF scenario, where Grayscale’s Bitcoin Trust (GBTC) faced $17.5 billion in outflows post-launch of 11 spots BTC funds.

Moreover, Grayscale’s Ethereum Mini Trust, a lower-fee product, saw $15.2 million in new inflows. Franklin Templeton’s fund (EZET) netted $13.2 million, while 21Shares’ Core Ethereum ETF (CETH) attracted $7.4 million. Collectively, the spot ETH funds generated $1.08 billion in trading volume, equating to 23% of the debut volume of spot Bitcoin ETFs.

Options Market Signals Potential Price Decline

Besides, while spot prices for Ethereum stayed flat, the options market showed activity. On July 26, volatility increased by 8-vols, while the risk reversal dipped by 3 vols, signalling caution towards potential price drops. This divergence suggests traders might be preparing for further near-term declines.

QCP Capital noted that the options market expects more downside movement, influenced by US Government actions and Mt Gox news. They believe Ethereum prices may remain subdued short-term, with BTC selling pressures indirectly affecting ETH prices. Additionally, the initial impact of the ETH Spot ETF has yet to reflect in the market, with traders possibly waiting for more momentum, particularly as the US elections approach.Ethereum was down 0.61% over the previous day to trade at $3,439.07, with a $24,178,401,053 24-hour trading volume as of this writing.